Consumer advocate challenges Westar rate increase

The state’s chief representative for utility customers is challenging how Westar Energy Inc. plans to increase its rates to cover $871 million in pollution control costs.
    In a regulatory filing, the Citizens’ Utility Ratepayer Board, which acts as a consumer advocate on utility matters, claims Westar is misusing an environmental surcharge designed to collect money for plant upgrades required to meet federal clean air regulations.
    The Kansas Corporation Commission in 2005 allowed Westar, the largest electric utility in the state with 670,000 customers, to break out the surcharge on bills.
    But the ratepayer board claims the surcharge was meant as a stopgap measure to tide the utility over until it formally requested a rate change, when all expenses — including environmental ones — could be considered in depth. Instead, Westar wants to extend the surcharge and keep environmental costs apart from its regular rate-change requests.
    “It is simply unacceptable that Westar will be able to place $871 million into rates over the next few years with no more evidence in the record than a few eight-page memos,” the board said in its filing with the commission.
    Utilities nationally are increasingly moving to separate surcharges to speed up the recouping of costs ranging from pollution control to fuel and security.
    Critics, however, say those surcharges don’t receive the same careful study of a regular rate-change request and may not adequately show how fast certain costs are rising.
    The KCC in 2005 approved a $3 million rate increase for Westar as well as the company’s request to use an environmental surcharge. David Springe of the ratepayer board warned at the time that the overall rate increase was “going to be much bigger” because of the surcharge.
    Westar is now requesting to collect the $27 million annual environmental surcharge, which can be changed, while still leaving those environmental costs out of a regular rate-change request. The effect of the surcharge, split between customers in Westar’s northern and southern territories, would be from $1.50 to $2 extra per month.
    The commission’s staff has recommended approval of the surcharge, which is scheduled to go into effect June 1.
    Jim Ludwig, a Westar vice president, said the utility supports keeping the environmental surcharge separate because it shows customers on the bill how much clean-air requirements cost.
    “I think that is a good thing,” Ludwig said.
    Staff members also are recommending that the commission approve keeping the surcharge separate as opposed to folding those costs into an overall rate-change request. The staff reviews monthly reports of utilities’ environmental expenses and can require that a company doesn’t take in more to cover those costs than they are allowed.
    “We’re confident the staff is able to do a thorough review,” said commission spokeswoman Rosemary Foreman.
    But the ratepayer board said the environmental expenses, which have ballooned since an initial estimate of $463 million, need to be part of an overall rate case, especially so regulators can see what caused the increase.